Completion of Demolition Marks the Beginning of a Possible Refinery Expansion in Texas

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Researched by Industrial Info Resources (Sugar Land, Texas)--Pasadena Refining System Incorporated (PRSI) (Pasadena, Texas) is nearly complete with the demolition of a former paper mill located adjacent to its site. PRSI purchased the site years ago and began to dismantle and demolish large portions of the paper mill in August of last year with the intentions of making room to expand its refinery. DEMCO Incorporated (West Seneca, New York) was hired to complete the demolition project, which included major portions of the estimated 160-acre site.

The former paper mill site is located immediately across from the refinery and provides the space necessary for a planned expansion of the PRSI refinery, which will cost an estimated $1 billion to complete. This expansion could include the addition of a new cogeneration unit, diesel hydrotreater, gas oil hydrotreater, crude unit, sulfur recovery unit and much more. If this expansion is approved, these new units will employ technology to process high-density crude oil and nearly double the refinery's capacity to an estimated 200,000 barrels per day by 2010.

PRSI is a joint venture of Petroleo Brasileiro S.A. (NYSE:PBR) (Petrobras) (Rio de Janeiro, Brazil) and Astra Holding USA Incorporated (Huntington Beach, California), who jointly participate in the management of refinery and trading operations. Late last year, Petrobras began discussions to buy the remaining 50% stake in the PRSI venture. Buying the remaining interest in the asset would be consistent with Petrobras' appetite and goal of increasing its crude oil processing capacity globally over the next four or more years.

Considering the cost to construct new refining capacity in the United States, the strategic and logistical fit of the former paper mill site and PRSI refinery provide several synergies and cost benefits. Petrobras has access to a sizeable amount of Marlim crude and proposes to convert portions of the existing refinery to process this as feedstock for current and future crude units.

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